NYC Apartment Rents Cool Slightly As Market Begins Normalizing
New York apartment rents cooled slightly last month but are still near historic highs as the market begins to normalize after nearly three years of pandemic highs and lows.
The average rent in Manhattan was down 1.7% last month compared to October, although unit rental prices were 19% higher than the previous November, according to Douglas Elliman's latest rent report. Brooklyn landlords experienced a similar pattern, with average prices down 4.6% this November compared to October, but 16.8% higher than a year ago.
“It appears as this rental seasonality is, if not back, on its way back,” Douglas Elliman Executive Vice President of Residential Leasing Hal Gavzie said in an interview. “This November seemed pretty much in line with past Novembers. There's still the challenge, of course, that the average rents are still very close to the historic highs.”
The elevated rents in Manhattan and sought-after Brooklyn neighborhoods are pushing up prices in Queens, Gavzie said. Average Queens rents were up 2.4% from October to November this year, and up 16.8% year-over-year.
“Even if, obviously, Queens rents are higher than they've been in the past, there's still a reduction and a discount compared to Manhattan and prime Brooklyn neighborhoods,” Gavzie said.
The higher rents might be a boon to landlords' bottom lines, but they also create challenges for landlords, whose attempts to find solutions are visible in the data, Gavzie said.
One consequence is fewer leases being signed: just 3,070 leases were signed in Manhattan in November, representing a drop of almost 39% from the month prior. Lease signings were also down by 25.3% in Queens and 25.8% in Brooklyn over the same period.
“The percentage drop there is definitely noticeably high,” Gavzie said. “I think what's going on there is just due to the fact that you have current renters, whose leases were expiring, opted to renew as opposed to looking around and competing with the still-inflated rental market.”
Landlords are trying to get around reducing prices by offering concessions, Gavzie said. In Manhattan, 16% of new leases in November included concessions, compared to less than 13% the month prior. Approximately 21.3% of Brooklyn landlords offered concessions last month, up from 15.5% in October.
“Landlords still feel that I think they're in the driver's seat,” Gavzie said. “And so, instead of reducing rents, they're going with the free month concessions.”
Queens landlords, on the contrary, offered fewer concessions in November than they did in October. The continued rise in Queens rents, which has seen less development to begin with, Gavzie said, means displacement remains a threat to low-income New Yorkers. Along with prices across the city remaining high, renters could be staring down the barrel of a prolonged housing affordability crisis.
“There seems to be no affordable homes. I think what it's going to mean is, at some point, for the city to be more affordable, affordable homebuilding is going to have to happen,” he said. “I don't think anyone's crystal clear on how that's going to play out.”
While thousands of designated affordable apartments in Queens have been approved in recent weeks across a slew of large projects, like Innovation QNS and Hallets North, when those will actually be built remains an open question.